Georgia Tech Procurement Assistance Center

White House to buy office supplies in bulk to cut costs

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The same week President Obama will unveil his proposal to cut the national deficit, his White House will begin its own efficiency efforts — starting with office supplies.

Hoping to trim $600 million in the next four years, several federal agencies and departments will start pooling their purchases of office printers, copiers, and scanners, administration officials told The Washington Post.   Starting this week, the Departments of Commerce, Defense, Homeland Security, Justice,  and Treasury, as well as the Social Security Administration, are slated to begin  buying these items in bulk from 11 firms. The supplier list includes both larger companies like Canon and Lexmark, and some smaller, veteran- or  minority-owned suppliers, The Post reports.

This plan will also force departments to closely scrutinize their equipment stocks. “One of the things we’ve discovered is that agencies don’t have a clue what they have,” Dan Gordon, the Obama administration’s top federal contracting official, told The Post. “They don’t realize how many cellphones and BlackBerrys they have.”

Up next on the White House’s bulk-buying campaign: reining in spending on wireless service contracts. An additional $170 million could be saved annually if departments renegotiate their deals or merge several plans, according to Jeffrey Zients, the deputy director of the Office of Management and Budget.

— by Sara Sorcher – National Journal – September 19, 2011 – http://www.govexec.com/story_page.cfm?articleid=48826&dcn=e_tma

Four departments resist call to comply with Small Business Act

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Conflicting interpretations of agency internal reporting requirements in the Small Business Act have prompted a stalemate between four departments and congressional overseers examining the performance of programs designed to assure that small businesses get a fair share of federal contracting.

The Government Accountability Office in a report had found that seven agencies were not complying with the law’s requirement that the Offices of Small and Disadvantaged Business Utilization in every department except Defense must report directly to the agency.

At a hearing Thursday with the House Small Business Subcommittee on Contracting and the Workforce, a GAO specialist reported that the State, Commerce, Treasury and Justice departments recently had declined requests that they comply.

Subcommittee Chairman Mick Mulvaney, R-S.C., told the hearing that a failure to comply presents a clear conflict of interest and is “completely unacceptable . . .  President Obama says that ‘small business contracting should always be a high priority in the procurement process,’ but his administration disregards the basic protections for small business contractors,” Mulvaney said. “Instead of just lip service, he should make sure his administration is following the law in regards to small business requirements.”

OSDBUs were created in 1978 to help reserve some federal contracts for for-profit small business concerns in which socially and economically disadvantaged individuals own at least a 51 percent interest and manage and control daily business operations. Concretely, they seek to make sure that the tendency of contracting officers to bundle contracts for larger contractors does not exclude the disadvantaged. Reporting directly to an agency’s leader rather than only to its contracting officers is considered essential to fair consideration of contract awards, and more than half the agencies GAO surveyed said their OSDBUs report only to the agency head.

On Sept. 9, Small Business Administrator Karen Mills sent a memo to all agency heads asking them to comply. “Open and direct communication between the OSDBU director and the secretary, deputy secretary or their equivalent is paramount to ensure that small businesses receive the maximum practicable opportunity to compete for and win federal contracts that allow them to grow their businesses and create jobs,” she wrote.

GAO’s June report said seven noncomplying agencies also were out of compliance in 2003. They include Agriculture, Commerce, Interior, Justice, State, Treasury and the Social Security Administration. In August, Mulvaney sent letters to the noncomplying agencies asking them to respond by Aug. 31 about how they “intend to rectify the reporting relationship.”

William Shear, director of financial markets and community investments at GAO, explained at the hearing that Commerce and Justice disagreed that they’re not in compliance, while State and Treasury made a legal argument that they are free to delegate the authority for how OSDBUs report.

Shear told Government Executive that Agriculture didn’t reply, Interior sent a letter saying it will comply, and SSA promised to comply but hasn’t followed up with documentation.

Claims by Commerce and Justice that they are in compliance, Shear said at the hearing, “don’t fit the fact pattern” obtained when auditors interviewed the OSDBUs about interaction with agency heads. He said GAO found evidence of tension and frustration at  OSDBUs in agencies that were not complying because contracting offices are not always fulfilling their needs. “But some tension is healthy,” Shear said. He noted that there are no sanctions for noncomplying agencies.

Ranking member Judy Chu, D-Calif., agreed with the call for compliance at the hearing, which also dealt with mentor-protégé programs and SBA’s performance on data on its procurement center representatives. “Failure to comply with this requirement not only shows a callous disregard for the law, but also shortchanges small businesses that end up suffering the consequences of OSDBU’s diminished agency standing,” she said.

A spokesman for Commerce, Kevin Griffis, told Government Executive that “the department is in compliance with the law, and both its record and the progress being made to continue to improve its performance speak for themselves. In 2010, the Small Business Administration, in its Small Business procurement score card, awarded the department a grade of ‘A’ for its procurement practices — up from the previous year’s ‘C.’

Justice spokeswoman Gina Talamona said in an email that the department “fully supports the mission of the Office of Small and Disadvantaged Business Utilization. Consistent with the Small Business Act, department regulations provide that the director report directly to the deputy attorney general. Although OSDBU is located within the department’s Justice management division for administrative purposes, the director still reports to the deputy attorney general on substantive matters.”

Mulvaney said he plans to hold another hearing on OSDBUs and invite agency heads or senior officials from noncomplying agencies, adding, “They won’t enjoy it.”

— by  Charles S. Clark – Government Executive – September 16, 2011 at http://www.govexec.com/story_page.cfm?articleid=48818&dcn=e_gvet

Recent large IT contracts could cut prices for government, experts say

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The Social Security Administration, Homeland Security Department, and the Centers for Disease Control and Prevention each have awarded during the past month multibillion dollar, comprehensive information technology contracts that could prevent the types of cost overruns that have long plagued projects of all sizes, according to some procurement experts.

The Office of Management and Budget has recently issued numerous policies to curb contracting waste, as well as directives focused solely on IT acquisition reform. None of the memos ban megacontracts, but they do instruct agency heads to renegotiate existing agreements for lower prices and reduce reliance on high-risk contract vehicles.

The three agencies engineered their pacts for an array of services in a way that would ensure competitive prices, ease of ordering and more consistency in contract administration, said Ray Bjorklund, chief knowledge officer at market research firm FedSources. SSA awarded a $2.8 billion contract to four vendors; DHS signed a $2.63 billion deal with one of 59 suppliers participating in a governmentwide contract program; and CDC entered into an agreement worth a potential $5 billion with 30 companies.

But while the trend of one-stop-shop jumbo deals might be positive for the government, it is not always beneficial for vendors that must pay more for a chance to participate in all the contracts.

The companies rack up additional bidding costs, as well as recurring sales and administrative expenses to track upcoming orders — which they sometimes recoup by raising government prices down the road, Bjorklund said.

“If OMB is trying to achieve a less risky contracting environment, I’d say these contracts do that. They’re less risky, [but] it doesn’t mean they’ve mitigated all the risks,” he said.

In each case, interested parties had to or will have to negotiate lower prices to win a contract. While DHS awarded its contract to Northrop Grumman Corp., the company already had competed to get into the huge Alliant program, which consists of a group of contractors authorized to provide governmentwide IT services.

The three projects are variations of multiple-award indefinite delivery-indefinite quantity contracts, in which the federal agency has the right to issue an unknown number of work orders during a given period of time.

At CDC offices worldwide, 30 suppliers that were named on Sept. 23 will have to vie for task orders in multiple categories of work during the next decade, CDC Chief Information Officer Jim Seligman said. Groups of three to 11 awardees will bid against each other for services, including information management, management consulting and IT infrastructure.

In addition, CDC officials said the contract reduces administrative costs by merging an existing support services contract and numerous other orders placed through various vehicles, such as General Service Administration schedules, the procurement agency’s list of companies approved to conduct government business.

Dispensing separate contracts saps time, energy and government resources, Seligman explained. “By consolidating these contracts and then having ongoing competitions will achieve better pricing,” he said.

DHS is paying Northrop Grumman to install networks at the agency’s new headquarters on the campus of the former Saint Elizabeths Hospital in Southeast Washington, according to a federal award notice issued on Sept. 23. The work probably will not cost more than $300 million during any one year of the 10-year contract, according to Bjorklund. “Multibillion dollar contracts don’t equate to multibillions in a single year,” he noted.

SSA officials have said they will replace any of the four companies that perform poorly during its seven-year technology refresh project, so no contractors are guaranteed continuous pay. “The fact that there is an ability to fire a contractor means that the competitive practices are still at work,” Bjorklund said. The contract was awarded on Sept. 10 to Accenture, Computer Sciences Corp., Lockheed Martin Corp. and Northrop Grumman.

Agency IDIQs simplify the contracting process for the government, but they can complicate the bidding process for contractors, which must repeatedly submit proposals to get into each pool of potential money.

“I don’t think a lot of people in government are sensitive to what impact it has on industry,” he said. “When you start making contractors incur more expenses, many of those additional expenses are rolled up into future pricing.”

Meanwhile, some good government groups view all billion-dollar projects as risky. “They should all be examined thoroughly” by White House officials, said OMB Watch Executive Director Gary Bass, a critic of federal contracting.

The Obama administration “expects all agency IT contracts to be well-planned, well-managed and deliver successful results on time and within budget,” said OMB spokeswoman Moira Mack. “When that does not happen, agencies are expected to make timely and effective interventions to remedy the deficiencies in contractor performance.”

— By Aliya Sternstein – NextGov.com –  10/04/10 – © 2010 NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED

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